Wage Theft: Undermining the Value of Work

Wage theft occurs when an employer does not pay a worker for the work they have performed. There is growing evidence that the laws which provide workers with a guarantee of wages for hours worked—minimum wage laws, overtime laws—are not being enforced. As a result, in one of the worst economic downturns of the modern-era, workers across the county and in North Carolina are facing the prospect of working without pay. The results are devastating for these families struggling to make ends meet and equally so for their communities. A decline in spending power means less demand for local business’s goods and services. In combination with the loss of wages, this decline in spending leads to a steep decline in tax revenue for local and state governments leading to fewer resources available to invest in economic recovery.

National Data Provides a Clearer Picture of Wage Theft

A landmark survey into employment law violations was undertaken in 2008. The results provide unique information about the scope of wage theft: 26 percent of workers were paid below the minimum wage in the week prior to the survey, 19 percent had unpaid or underpaid overtime, and 17 percent were not paid for off-the-clock work.[1]

Minimum wage violations represented a significant loss to workers. 60 percent were underpaid by more than $1. For overtime violations, there was a similarly high cost to workers. The average worker had put in 11 hours that were either unpaid or underpaid.[2]

Wage theft is more likely to occur in certain industries. According to the survey, minimum wage violations were highest in the apparel and textile manufacturing and personal and repair services industries. Overtime violations were highest in the childcare industry and among cashiers.

The Tip of the Iceberg in North Carolina: Documented Wage Theft Cost Workers and their Communities $5.6 million in 2010

The full scope of wage theft is difficult to measure. The most readily accessible data is from the NC Department of Labor, Wage and Hour Divisions. This represents only the claims that are brought to their attention and so there is currently no way to assess the true incidence of wage theft in the state.

However, the numbers that the Wage and Hour Division have available are still alarming. In 2010, the Wage and Hour Division investigated 1,421 employers and found that workers were due total wages in excess of $3.7 million. For an additional 2,248 workers more than $1.9 million were recovered without litigation.[3]

A mapping of all cases brought to the Wage and Hour Divisions demonstrates the significant concentration of cases in urban areas with additionally high numbers in the eastern and western part of the state.[4]